Journal of Political Economy Vol. 106 No. 2 1998
Advance‐Purchase Discounts and Price Discrimination in Competitive Markets
Abstract
When both individual and aggregate consumer demand is uncertain and firms set prices before demand is known, price‐taking firms may offer advance‐purchase discounts. Consumers with relatively more certain demands and with relatively lower valuations have an incentive to buy in advance the presence of other consumers with higher valuations and more uncertain aggregate demand increases the price they expect to pay in the spot market. Advance‐purchase sales are made to low‐valuation customers, as predicted by traditional models of second‐degree price discrimination, without assuming that firms have market power.
- DOI
- 10.1086/250014
- Volume
- 106
- Issue
- 2
- Pages
- 395-422
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib